Bohemians Club v Acting Federal Commissioner of Taxation [1918] HCA 16

High Court of Australia|1918-07-01|Before: Rich JJ, Rich J

. Se H.C. or A, Income Tax - Assessment - Income - Club - Subscriptions of members - Income Tax

Assessment Act 1915-1916 (No. 34 of 1915 - No. 39 of 1916), secs. 3, 10. Mul aise The annual subscriptions of members of a social club are not taxable income March 15, 21. ° the club within the meaning of the Income Tax Assessment Act 1915-1916, larch 15, 21. . P oF be . and are not to be taken into account in ascertaining its taxable income. Griffith C.J., Barton, Powers and Rich JJ.

On an appeal by The Bohemians Club from an assessment of the Club by the Federal Commissioner of Taxation for income tax, Rich J. stated the following case for the opinion of the Full Court : -

Pursuant to sec. 28 (1) of the Income Tax Assessment Act 1915-1916 the said Club by its secretary duly furnished to the Commissioner of Taxation a return for the year ending 31st Decem- ber 1914, which return was accepted by the Commissioner pursuant to sec. 28 (1) of the Act in lieu of a return for the financial year. Annexed to such return was a copy of the Club's annual statement of receipts and expenditure.

The Commissioner assessed the Club for income tax on £96 5s. 6d. as being the taxable income of the Club shown by the said annual

ed an objection which was disallowed by the Commissioner.

_ 5. The said Club appealed to the High Court pursuant to the provisions of sec. 37 (4) of the said Act.

The said appeal being now before me for hearing, I state this for the opinion of the High Court upon the following question f law arising in the appeal: (1) Are the annual -subseriptions of

of receipts and expenditure income of the Club within the ing of the said Act ?

At the hearing of the case stated the following question was a : (2) Are such subscriptions to be brought into account for he purpose of ascertaining the taxable income of.the Club ?

Mitchell K.C. and Mann, for the appellant. Assuming that a

purposes of their own is not income at all. If subscriptions wild be taken into account in ascertaining the taxable income of the club so also should a call made when it is found that the

expenses. The term "income " in regard to companies is used meaning profits (Lawless v. Sullivan (3); Webb v. Australian sitand Mortgage Bank Ltd. (4); Melbourne Trust Ltd. v. Commis- mer of Taxes (Vict.) (5); Moffatt v. Webb (6)). The whole case

et from its members. The only object for making a club a rate entity is to make it possible to serve notices, &c., upon it ead of upon the individual members. The important question

ement. Included in the assessment were the annual subscriptions H- C. or A-

The said Club, being dissatisfied with such assessment, duly Bonemraxs

Crug v. ActiInG Feperav Commis- SIONER OF 'TAXATION.

~~ BOHEMIANS: CLuB v. ActTInG F AL Commis- SIONER OF 'TAXATION.

is whether the members have a taxable income. They cannot hav an income derived from themselves. The expenditure of each i not the income of all.

Starke, for the respondent. The subscriptions of members of a club are income because they are paid yearly, and because by Act a club is made a separate entity from its members. If Club were a company as ordinarily understood there would be doubt that annual payments made to it by the members for | purpose of carrying on its functions would be income. There is a1 essential difference between the Income Tar Assessment Act the English Income Tax Act 1842 (5 & 6 Vict. c. 35). The lat Act imposes a tax upon the profits or gains of a trade, and it h been held by the English Courts that a club is not in respect of members engaged in trade. What is taxed under the former Ac not profits or gains but income. The basis of the taxable income is the gross receipts from which are deducted what the Act allow (sec. 18). All money that is not paid to a club as capital is incor and by capital is meant that which is to be preserved either in money or in kind until the end of the adventure. There is ni difference between an ordinary social club and a proprietary ch or between the case of subscriptions to a club and an annual all ance made by a father to his son.

that the Club, being an anil association, falls within definition of company and may be a taxpayer (sec. 3); that it is" therefore to be regarded as a legal entity entirely distinct from its members, and that, therefore, all moneys received from its members. ? are taxable income. Neither of these conclusions follows from

ception of the nature of a club, which is a voluntary associa-

e sufficient to defray those expenses, and the management of h is entrusted to a committee chosen by themselves. On le, it is quite immaterial whether the contributors are two

to anyone to say that the two or three are collectively in pt of income from the individuals. Nor are the committee of lub or the club itself. The contributions are, in substance, es of capital for a common purpose, which are expected to be ed during the year for which they are paid. They are not of the collective body of members any more than the calls y members of a company upon their shares-are income of the f If anything is left unexpended it is not income or profits, s wings, which the members may claim to have returned to The notion that such savings are taxable income is quite vel, and quite inadmissible.

ie only arguments that have been set up against this view are under the Income Tax Assessment Act all yeceipts or " incom-

etation clause has nothing to do with substantive rights. he members of a club collectively have a taxable income, the

from sources within Australia." A man is not source of his own income, though in another sense his exertions be so described. A man's income consists of moneys derived sources outside of himself. Contributions made by a person for iture in his business or otherwise for his own benefit cannot

The argument is, indeed, founded upon a complete H.C. or A

be regarded as his income, unless the Legislature expressly so

declares. This Act does not contain any such declaration either express or implied.

A somewhat similar argument addressed to this Court in the case of Mooney v. Commissioners of Taxation (N.S.W.) (1) was rejected both by it and by the Judicial Committee (2).

The Carlisle and Silloth Golf Club's Case (3) shows that the view above expressed as to the nature of club subscriptions is accepted in the United Kingdom. The case of the New York Life Insurance Co. v. Styles (4) is, in my opinion, not distinguishable in principle.

I think, therefore, that both questions must be answered in the negative.

Powers J. (read by Grirritx C.J.). I concur in the judgment delivered by the learned Chief Justice.

Ricu J. read the following judgment : - The question for our determination is whether the subscriptions of the members of the Bohemian Club are taxable income within the meaning of the Income Tax Assessment Act 1915-1916. I will assume that this Club is an unincorporated association within sec. 3 of the Act. That, however, leaves the question whether this body has an income which is taxable.

Counsel for the respondent argued that these subscriptions were income derived from personal exertion. Of whom can such exertion be predicated - the Club or its members? The answer is of no importance because " 'income from property'. . . means allincome

not derived from personal exertion," whether it isincome from. property or not. It is not easy to understand why "income from property " should have this wholly artificial meaning fixed upon it. We are thus brought to the question, what language in the Act imposes a burden on these subscriptions? I can find none. Such

(3) (1913) 3 K.B., 75. 50; 4 (4) 14 App. Cas., 381.

es are not income. No doubt, the returns from sales of any H.C. or A.

mmodities are income of the association on the assuniption | 19!* made, but it would require an established customary meaning Boxemans

n fiscal provisions to enable the word " income" to be stretched aps to cover such subscriptions as these. I know of no such extended ACTING

A ;, 2 SIONER OF _ I therefore answer the questions submitted in the negative. Texarida

Questions answered in the negative. Costs to be costs of the appeal.

Solicitor for the respondent, Gordon H. Castle, Crown Solicitor for he Commonwealth.

Atl Hala et 1 ats Hi a ee fe fase? ue) bs ta SER tow"

ion - Opposition - Want of novelty - Prior publication - Onus of H.C. or A.

_ proof - Patents Act 1903-1909 (No. 21 of 1903 - No. 17 of 1909), sec. 56. 1918.

YL

'An application for a patent for an "improved mode of and apparatus for MrLnovane, _ drying and deodorizing nightsoil, slaughter-house refuse and other analogous March 8, 20. 'materials " was opposed on the grounds of want of novelty and prior publica- ae tion, and the Commissioner of Patents upheld the opposition. On appeal to gaan Dulfy 'the High Court, and Rich JJ.

At a glance

Court

Decision date

Before

Source

Judgment (48 paragraphs)